The Bank for International Settlements and the central banks of Hong Kong and Israel released the results of Project Sela on Sept. 12. The project was a public-private partnership that used private intermediaries to create a retail central bank digital currency (rCBDC) combining the desirable characteristics of cash and the advantages of digitalization.
The project leveraged the central banks’ diverse experience to incorporate a number of predefined policy, security, technology and legal features. The private participants were fintechs FIS and M10 Networks, which provided core products, Clifford Chance for legal analysis and Check Point Software Technologies for cyber security. The project was a proof-of-concept.
Project Sela proposes a new financial infrastructure, the Access Enabler, which facilitates customer-facing activities without ever holding users’ rCBDC. It removes complexity, costs + risks compared w current payment providers #BISInnovationHub @hkmagovhk https://t.co/znVp81gQol pic.twitter.com/hItQamQc0K
— Bank for International Settlements (@BIS_org) September 12, 2023
In the Sela ecosystem, the central bank that issues an rCBDC maintains the ledger for it with pseudo-anonymous end-user accounts and provides instantaneous settlement with a real-time gross settlement (RTGS) system. Funding institutions manage users’ accounts and convert the rCBDC into and out of bank deposits and cash. An intermediary called an access enabler handles all customer-facing services, including Know Your Customer compliance, endorsements and routing, while end users maintain control over their electronic wallets with cryptographic keys.
Related: Hong Kong regulator eyes tokenization for bond market improvement: Report
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Author: Derek Andersen
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